Swiss Franc Outperforms, Canadian Dollar Struggles To Hold Ground

Daily Winners and Losers

Currency	Last	High	Low	Daily Change (pip)	Daily Range (pip)
USDCHF	0.9512	0.9602	0.9478	81	124

The Swiss franc continued to outperform against its major counterparts, with the USD/CHF slipping to a fresh weekly low of 0.9478, and the rebound in the low-yielding currency may gather pace going into the end of the week as investors 

diversify away from the greenback. The dollar-franc remains 80+pips lower from the open after moving 118% of its average true range, but the two-day decline appears to be tapering off during the North American trade as the relative strength index bounces back from oversold territory. In turn, we may see the USD/CHF consolidate going into the Asian session, and the pair may look to close the gap from the 120-SMA at 0.9633 if we see the rebound in the exchange rate gather pace. However, as the dollar-franc carves out a near-term top in February, the pair is likely to retrace the advance from earlier this month, and currency traders may have an opportunity to take advantage of the range-bound price action as the pair trades within 0.9300-0.9800.

Key Levels/Indicators

Level/Indicator	Level
100-Day SMA	0.9678
50-Day SMA	0.9571
20-Day SMA	0.9530
Support	0.9300

Currency	Last	High	Low	Daily Change (pip)	Daily Range (pip)
USDCAD	0.9836	0.9859	0.9816	12	43

The Canadian dollar struggled to hold its ground on Thursday as the USD/CAD bounced back from a fresh yearly low of 0.9816, and the rebound in the exchange rate may gather pace over the near-term as it comes up against trend line support. The dollar-loonie is still 10+ points lower on the day after moving 60% of its ATR, and the rebound in the RSI could lead the exchange rate to work its way back towards the 120-SMA at 0.9862 as the pair continues to trade within the downward trending channel carried over from the previous year. In turn, we should see a small correction in the USD/CAD, but a near-term rally in the exchange rate is likely to be short-lived as price action remains capped by the 78.6% Fibonacci retracement from the 2007 low to the 2009 high around 0.9900. However, as market participants expect price growth in Canada to hold steady in January, the fundamental development could bear down on the exchange rate, and market participants may scale back speculation for another round of monetary tightening as the rise in growth and inflation cools. If the report fails to meet market expectations, we may see a bullish breakout in the USD/CAD, and the exchange rate may make another run at the 50-Day SMA (0.9968) after it failed to break above the moving average earlier this month.

Key Levels/Indicators

Level/Indicator	Level
50-Day SMA	0.9968
20-Day SMA	0.9919
10-Day SMA	0.9895
2011 Low	0.9816

Upcoming Events

GMT	Importance	Release	Expected	Prior
12:00	MED	Consumer Price Index (MoM) (JAN)	0.3%	0.0%
12:00	HIGH	Consumer Price Index (YoY) (JAN)	2.4%	2.4%
12:00	MED	Bank Canada Consumer Price Index Core (MoM) (JAN)	0.1%	-0.3%
12:00	MED	Bank Canada Consumer Price Index Core (YoY) (JAN)	1.5%	1.5%
12:00	MED	Consumer Price Index (JAN)	--	117.5 source

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